Memorandum Book, Rough Book or Waste Book:
Introduction:
Whatever may be the method of book-keeping adopted, whether it is the theoretical method or the practical method, for recording the business transactions, some business houses, besides keeping the relevant books of accounts required under the method of book-keeping adopted, also keep a memorandum book, rough book or waste book. So, it is better for us to have some idea about the memorandum book, before we take up the study of the books of accounts.
Is the Memorandum Book Necessary?
At the very outset, it may be noted that maintenance of the memorandum book is not necessary for every business concern. So, it may not be maintained by every business concern. If at all it is maintained, it may be only in big business concerns where, every day, numerous transactions take place. Small business houses, which have very few transactions everyday, do not, usually, maintain the memorandum book.
Meaning of the Memorandum Book:
The memorandum book, rough book or waste book is the book kept by a business concern for noting down (i.e., recording) briefly it's business transactions, as and when they take place during the course of the day. In other words, it is the book kept by a business house merely for a brief listing (i.e., noting down) of the daily transactions. It is called the memorandum book, because it is kept just for the sake of memory (i.e., for ensuring that no transaction slips away from memory or is omitted from recording). It is called the rough book, as it is just a rough record of the transactions in the chronological order (i.e., in the order of dates). It is called the waste book, as it will be a waste (i.e., useless) once the entries made in it are recorded in the books of account.
Writing up of the Memorandum Book:
In the memorandum book, the transactions are recorded daily in the order in which they take place. Entries in this book are made from the original records or documents, such as the invoices, receipts, vouchers, debit note, credit notes, etc. It may be noted that there are no rules required to be observed for recording the transactions in this book. All that is necessary is to see that all the transactions are recorded briefly in the order in which they take place.
Nature of the Memorandum Book:
The waste book is only a memorandum book, and not a book of accounts. As such, it does not form part of the double-entry system. That is, it does not contain either the debit entry or the credit entry for any transaction.
Use of the Memorandum Book:
The memorandum book facilitates the writing up of the books of accounts. That is, the entries made in the memorandum book form the basis of entries made in the books of accounts. The entries in the books of account, i.e., in the books of original or first entry, viz., the single journal or the several subsidiary books, are made from the entries made in the memorandum book.
Specimen of the Memorandum Book:
The following is the specimen of the memorandum book:
1992 January 1 Commenced business with cash Rs.10,000.
1992 January 1 Purchased goods for cash Rs.3,000
1992 January 1 Opened a bank account with Rs.2,000
1992 January 1 Purchased stationery Rs.100
1992 January 1 Purchased furniture Rs.1,000
1992 January 1 Sold goods to A on credit Rs.2,000
1992 January 2 Purchased goods from B on credit Rs.2,000
1992 January 2 Sold goods for cash Rs.1,000
1992 January 2 Paid for postage Rs.20
1992 January 2 Took loan from C Rs.1,500
1992 January 3 Paid rent Rs.300
1992 January 3 Withdrew from bank Rs.800
1992 January 3 Received from A on account Rs.500
1992 January 3 Paid commission by cheque Rs.200
Differences between the Memorandum Book and the Books of Accounts:
The memorandum book is quite different from the books of accounts. There are number of differences between the Memorandum Book and the Books of Accounts. The main differences between them are:
1. The memorandum book does not form part of the double-entry system, whereas the books of accounts form part of the double-entry system.
2. As the memorandum book does not form part of the double-entry system, it does not contain either the debit entry or the credit entry for any transaction. On the other hand, as the books of accounts form part of the double-entry system, they contain the debit and credit entries for every transaction.
3. There are no rules for recording the transactions in the memorandum book. But there are certain specific rules or principles, known as the principles of double-entry, for recording the transactions in the books of accounts.
4. The memorandum book is written up from original records or documents, such as the invoices, vouchers, receipts, etc. But the books of accounts are written up from the memorandum book. (Of course, in business houses where the memorandum book is not maintained, the books of accounts, viz., the journal or the subsidiary books, are written up from the original records).
5. The memorandum book is just a rough book or waste book, whereas the books of accounts are the proper and permanent records of business transactions.
6. The maintenance of the memorandum book is not necessary for every business. But the maintenance of the books of accounts is necessary for every business.
Introduction:
Whatever may be the method of book-keeping adopted, whether it is the theoretical method or the practical method, for recording the business transactions, some business houses, besides keeping the relevant books of accounts required under the method of book-keeping adopted, also keep a memorandum book, rough book or waste book. So, it is better for us to have some idea about the memorandum book, before we take up the study of the books of accounts.
Is the Memorandum Book Necessary?
At the very outset, it may be noted that maintenance of the memorandum book is not necessary for every business concern. So, it may not be maintained by every business concern. If at all it is maintained, it may be only in big business concerns where, every day, numerous transactions take place. Small business houses, which have very few transactions everyday, do not, usually, maintain the memorandum book.
Meaning of the Memorandum Book:
The memorandum book, rough book or waste book is the book kept by a business concern for noting down (i.e., recording) briefly it's business transactions, as and when they take place during the course of the day. In other words, it is the book kept by a business house merely for a brief listing (i.e., noting down) of the daily transactions. It is called the memorandum book, because it is kept just for the sake of memory (i.e., for ensuring that no transaction slips away from memory or is omitted from recording). It is called the rough book, as it is just a rough record of the transactions in the chronological order (i.e., in the order of dates). It is called the waste book, as it will be a waste (i.e., useless) once the entries made in it are recorded in the books of account.
Writing up of the Memorandum Book:
In the memorandum book, the transactions are recorded daily in the order in which they take place. Entries in this book are made from the original records or documents, such as the invoices, receipts, vouchers, debit note, credit notes, etc. It may be noted that there are no rules required to be observed for recording the transactions in this book. All that is necessary is to see that all the transactions are recorded briefly in the order in which they take place.
Nature of the Memorandum Book:
The waste book is only a memorandum book, and not a book of accounts. As such, it does not form part of the double-entry system. That is, it does not contain either the debit entry or the credit entry for any transaction.
Use of the Memorandum Book:
The memorandum book facilitates the writing up of the books of accounts. That is, the entries made in the memorandum book form the basis of entries made in the books of accounts. The entries in the books of account, i.e., in the books of original or first entry, viz., the single journal or the several subsidiary books, are made from the entries made in the memorandum book.
Specimen of the Memorandum Book:
The following is the specimen of the memorandum book:
1992 January 1 Commenced business with cash Rs.10,000.
1992 January 1 Purchased goods for cash Rs.3,000
1992 January 1 Opened a bank account with Rs.2,000
1992 January 1 Purchased stationery Rs.100
1992 January 1 Purchased furniture Rs.1,000
1992 January 1 Sold goods to A on credit Rs.2,000
1992 January 2 Purchased goods from B on credit Rs.2,000
1992 January 2 Sold goods for cash Rs.1,000
1992 January 2 Paid for postage Rs.20
1992 January 2 Took loan from C Rs.1,500
1992 January 3 Paid rent Rs.300
1992 January 3 Withdrew from bank Rs.800
1992 January 3 Received from A on account Rs.500
1992 January 3 Paid commission by cheque Rs.200
Differences between the Memorandum Book and the Books of Accounts:
The memorandum book is quite different from the books of accounts. There are number of differences between the Memorandum Book and the Books of Accounts. The main differences between them are:
1. The memorandum book does not form part of the double-entry system, whereas the books of accounts form part of the double-entry system.
2. As the memorandum book does not form part of the double-entry system, it does not contain either the debit entry or the credit entry for any transaction. On the other hand, as the books of accounts form part of the double-entry system, they contain the debit and credit entries for every transaction.
3. There are no rules for recording the transactions in the memorandum book. But there are certain specific rules or principles, known as the principles of double-entry, for recording the transactions in the books of accounts.
4. The memorandum book is written up from original records or documents, such as the invoices, vouchers, receipts, etc. But the books of accounts are written up from the memorandum book. (Of course, in business houses where the memorandum book is not maintained, the books of accounts, viz., the journal or the subsidiary books, are written up from the original records).
5. The memorandum book is just a rough book or waste book, whereas the books of accounts are the proper and permanent records of business transactions.
6. The maintenance of the memorandum book is not necessary for every business. But the maintenance of the books of accounts is necessary for every business.
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